July market up but long-term view not so bright

New car registrations were up for the twelfth month in a row as production and deliveries moved towards pre-pandemic levels. The main changes came from fleets and business users many of whom have been waiting for production to go up and costs to come down.
The retail market is more stable as outstanding orders come through and current buyers become more cautious with inflation and interest rates running at high levels. Much is made of the growth of electric car registrations, which, in July, recorded a battery electric car being registered every sixty seconds. This is mainly down to fleet and business users, although, as charging infrastructure and range improves, more people are considering an electric car.
The best-selling car in the month and the year to date is the Ford Puma which is only available as a hybrid at the moment, so there is some way still to go if government targets are to be achieved.
The light commercial market also moved up for the seventh month in a row with demand for electric vehicles almost doubling as businesses, such as commercial construction, move forward.
The car market is forecast to rise over 14% to reach around 1.9 million in 2023 with a marginal increase in 2024, well below the averages before the pandemic of about 2.3 million and the record almost 2.7 million in 2016. The light commercial market forecast to be up 16.1 % to 328,000 in 2023 with a marginal increase in 2024. The Society of Motor Manufacturers and Traders said the downgrade in 2024 “reflects wider concerns about the cost of living”.
Tesla continues its growth with over 2% of the market but Chinese brands are now showing an increasing influence with MG almost doubling its sales in the month to over 4% and Volvo rising almost 34% with 2.6% of the market. More appointments are being by BYD, Ora and Chery and there is concern in Europe that the introduction of cheaper electric vehicles by 2025 will put pressure on European manufacturers.
The government has not yet produced its plan to replace the current taxation on vehicles and it is expected there will be continued incentives to move to electric vehicles and penalties for internal combustion engines. They are aware of the negative effect this will produce in rural areas where public transport is inadequate and expensive and are looking for some way to compensate for this. This is of particular interest to us in Devon and Cornwall where a car is a necessity for many reasons. One suggestion has been relating any tax to mileage where the heaviest users of the roads bear the heaviest cost but we need to know their proposals as soon as possible.
The new 73 plate is with us from the 1st September and this will be an important month for the industry to confirm confidence. There are already some offers from manufacturers and dealers, particularly where stock is or is expected in the month and if you have a desirable part-exchange you may be pleasantly surprised by its value.